Comparison of Post-9/11 GI Bill and Pell Grant Administration

Transcription

1 Comparison of Post-9/11 GI Bill and Pell Grant Administration (name redacted) Analyst in Education Policy June 24, 2015 Congressional Research Service R44088

2 Summary This report compares and contrasts the administration of the Post-9/11 Veterans Educational Assistance Act of 2008 (Post-9/11 GI Bill ) enacted as Title V of the Supplemental Appropriations Act, 2008 (P.L ) and Federal Pell Grants, as authorized by Title IV-A-1 of the Higher Education Act (HEA). The Post-9/11 GI Bill provides educational assistance payments to eligible servicemembers and veterans, and their dependents. One of its primary objectives is readjustment of veterans to civilian life and the workforce. The federal Pell Grant program provides grant aid payments to eligible and financially needy undergraduate students, regardless of military service record. One of its primary objectives is to increase postsecondary education access of low-income individuals. The report investigates whether the administrative processes supporting Pell Grants can provide lessons for achieving more timely, efficient, and student-friendly administration of the Post-9/11 GI Bill, thus ensuring that it achieves its policy objectives with respect to educational achievement of the target population. There are several differences between the programs and their administration. Post-9/11 GI Bill eligibility is contingent on service in the uniformed services, whereas Pell Grant eligibility is contingent on financial need. Post-9/11 GI Bill benefits must be used within several years of discharge from active duty, whereas Pell Grants can be used at any stage of an individual s life. The Post-9/11 GI Bill benefit was designed to meet most costs of education, whereas the Pell Grants were designed to meet a portion of an individual s financial need. Eligible individuals may receive both benefits concurrently. When comparing the administrative processes of the programs, there are at least three important considerations. One is the difference in the number of beneficiaries/recipients estimates indicate there were fewer than 1 million Post-9/11 GI Bill participants and more than 9 million Pell Grant recipients in FY2014, which leads to economies of scale and greater familiarity for Pell Grant administrators. Another is the greater variety of programs of education approved for the Post-9/11 GI Bill, which increases administrative complexity. Finally, while the Post-9/11 GI Bill went into effect in 2009, the Pell Grant administrative processes are more mature, having been developed and administered for decades. There are areas in which the Post-9/11 GI Bill processes and procedures arguably could be improved if compared to the Pell Grant program. The key area would be a larger investment in system automation and internal controls to more fully automate the processes and maintain them with respect to ongoing legislative changes. For example, Post-9/11 GI Bill eligibility determinations could be more fully automated. VA systems could choose the most advantageous GI Bill programs based on applicant information. Exact payments and unmet costs may be estimated for Post-9/11 GI Bill participants prior to enrollment to encourage informed enrollment. Providing payments to educational institutions to disburse to students may eliminate an extra processing step by the VA and speed payments and adjustments. Overpayments of Post-9/11 GI Bill payments could be resolved through deductions from subsequent Post-9/11 GI Bill payments or other VA benefit payments. However, there may be underlying issues that prevent or hinder improvements and may suggest a limited advantage from them. For example, a single lump sum housing allowance payment before the start or at the beginning of the academic term may help pay early housing expenses; however, it may increase the incidence and amount of overpayments and debts. Congressional Research Service

3 Contents Introduction... 1 Overview of Programs... 2 Post-9/11 GI Bill... 2 Federal Pell Grant Program... 4 Key Differences... 6 Benefit Application and Submission Application for Veterans Education Benefits Pell Grant Application: FAFSA Initial Claim and Application Processing Post-9/11 GI Bill Eligibility Verification Certificate of Eligibility (COE) Processing Speed/Time Pell Grants Eligibility Verification ED Calculated EFC Student Aid Report (SAR) and Institutional Student Information Record (ISIR) Processing Speed/Time Secondary Processing (Supplemental Claims)/ Disbursement of Funds Post-9/11 GI Bill Certification of Enrollment by the Educational Institution Additional Certifications Educational Institution and Training Establishment Recordkeeping Processing of Certifications Payments Processing Speed/Time Pell Grant and Title IV Aid Packaging Secondary Eligibility Verification Pell Grant Award Title IV Aid Package Processing Payments School Administration of Pell Grant Funds Processing Speed/Time Subsequent or Adjusted Payments Post-9/11 GI Bill Satisfactory Academic Progress or Conduct Change of Program or Place of Training Pell Grant Satisfactory Academic Progress Overpayments Post-9/11 GI Bill Educational Institution Responsibility to the VA Student Responsibility to VA Payment Error Rate and Magnitude Congressional Research Service

4 Pell Grant School Responsibility to ED Student Responsibility to the School and ED Payment Error Rate and Magnitude Post-9/11 GI Bill Issues and Concerns Participants May Not Maximize Federal Educational Assistance Responsibility to Select, Relinquish, or Transfer Benefits Lack of Real-Time Claim Information Cumbersome Initial Claim Processing Systems and Accompanying Delays Administrative Burden on SCOs Inconsistent Automation of Supplemental Claims Systems and Delays in Disbursement of Funds End of the Month Housing Allowance Inconsistent Tuition and Fees Benefits Confusion and Adversity Regarding Overpayment and Debt Resolution Tables Table 1. Key Program and Administrative Differences: Post-9/11 GI Bill (Ch. 33) and Pell Grant Program... 9 Table 2. Department of Veterans Affairs Education Related IT Systems Table 3. Maximum Payment Amounts for Post-9/11 GI Bill: 2014 Academic Year (August 1, 2014-July 31, 2015) Table A-1. Institutions of Higher Learning and Institutions of Higher Education: Comparison of Select Attributes Appendixes Appendix A. Comparison of Institutions of Higher Learning and Institutions of Higher Education Appendix B. Acronyms Appendix C. Post-9/11 GI Bill Secondary Processing and Disbursement of Funds for Additional Forms of Education and Training Contacts Author Contact Information Congressional Research Service

5 Introduction The Post-9/11 Veterans Educational Assistance Act of 2008 (Post-9/11 GI Bill ) enacted as Title V of the Supplemental Appropriations Act, 2008 (P.L ) 1 provides educational assistance payments to eligible individuals (servicemembers and veterans, and their dependents) from the Department of Veterans Affairs (VA) in accordance with their military service. The Department of Education s (ED s) Federal Pell Grants, as authorized by Title IV-A-1 of the Higher Education Act (HEA), provide grant aid payments to eligible undergraduate students in accordance with their financial need, regardless of military service record. Timely, efficient, and student-friendly administration is important in ensuring that each federal program achieves its policy objectives with respect to the target population. Each program has developed administrative processes, systems, and procedures designed to streamline aid administration. This report compares and contrasts administration of Post-9/11 GI Bill benefits and Pell Grant payments. Some participants have criticized the administration of Post-9/11 GI Bill payments for taking too long and asserted that the penalties for participants who received an overpayment of benefits are too high as compared to ED student aid programs. Some participant criticism is a result of simultaneous experience navigating the processes to receive Post-9/11 GI Bill benefits and Pell Grant payments. Since passage of the Post-9/11 GI Bill, the House Veterans Affairs Committee has held several oversight hearings to ensure administration of the Post-9/11 GI Bill meets the needs of servicemembers transitioning to civilian life. 2 The hearings have focused on automation, timeliness of payments, and accuracy of benefits. Some of the differences in aid processing are a consequence of the programs purposes. However, other differences in the processing design and operation may expose opportunities for improvement. This report is designed to assist congressional staff seeking an exploration of ways in which the administration of Post-9/11 GI Bill benefits might be improved through the adoption of practices employed in the administration of Title IV aid. The report approaches this task through an examination of the statutory and regulatory provisions that are pertinent to the design and administration of Post-9/11 GI Bill benefits and Pell Grants, the Title IV aid program that is seemingly the most comparable to Post-9/11 GI Bill benefits. The report also examines the operational practices employed to implement statutory and regulatory provisions. Information on operational practices, particularly those relevant to aid administration, has been obtained through a review of sub-regulatory guidance materials, manuals providing guidance to staff involved in administering aid, and through a limited set of interviews and site visits with individuals at federal agencies and colleges who are directly involved in administering aid. The report presents a thorough description of the administrative practices used for each of these educational assistance programs and attempts to identify differences and reasons for differences in the administrative practices used across the programs. It also identifies some ways in which existing practices might be enhanced, and discusses possible ways Post-9/11 GI bill benefit administration might be improved by adopting some Title IV practices. It is hoped that this examination can help 1 GI Bill is a federally registered trademark owned by the Department of Veterans Affairs (VA). 2 See, for example: U.S. Congress, House Committee on Veterans Affairs, Subcommittee on Economic Opportunity, A Review of Higher Education Opportunities for the Newest Generation of Veterans, 114 th Cong., 1 st sess., March 17, 2015; U.S. Congress, House Committee on Veterans Affairs, Subcommittee on Economic Opportunity, Increasing the Functionality of Post 9/11 GI Bill Claims Processing to Reduce Delays, 113 th Cong., 1 st sess., February 14, 2013; U.S. Congress, House Committee on Veterans Affairs, Subcommittee on Economic Opportunity, Update of the Post-9/11 GI Bill, 111 th Cong., 2 nd sess., September 16, Congressional Research Service 1

6 inform the dialogue on ways in which practices employed in the administration of one program may warrant consideration for their potential to streamline or enhance the administration of the other. The report does not intend to compare benefit levels, evaluate the process and rationale for calculating benefit amounts, or contrast the processes for approving GI Bill programs of education and for determining institutional eligibility and eligible programs of education for the Pell Grant program. Of the GI Bills administered by the VA and federal student aid programs administered by ED, the Post-9/11 GI Bill and Pell Grant programs were chosen for this analysis because of their commonalities. Neither program requires recipients to repay the funds, barring extenuating circumstances. Both programs are the largest educational assistance direct payment programs in terms of the numbers of participants and direct funding in each agency. This report begins with a brief overview of the two programs and a table summarizing the key administrative activities and differences. Please note that the statutory authorizations and administrative processes are designed and implemented independently without any required intersection. Subsequent sections of the report provide an in-depth explanation of the administrative activities from the application process to the calculation of benefits to the disbursement of funds and the process for participants and educational institutions to resolve GI Bill payments that exceeded a participant s eligibility (overpayments). The final section highlights associated and articulated issues and concerns about the administrative processes to explicate opportunities for improvement in each. For assistance with frequently used acronyms, see Appendix B. Overview of Programs This section provides a brief overview of program aspects that are helpful in understanding key similarities and differences in their administration. While the Post-9/11 GI Bill and Pell Grant programs are mutually exclusive, an individual may receive benefits from both programs concurrently if the individual is eligible for both programs independently. For a more detailed description of the Post-9/11 GI Bill, see CRS Report R42755, The Post-9/11 Veterans Educational Assistance Act of 2008 (Post-9/11 GI Bill): Primer and Issues, by (name redacted). For a more detailed description of the federal Pell Grant program, see CRS Report R42446, Federal Pell Grant Program of the Higher Education Act: How the Program Works and Recent Legislative Changes, by (name redacted). Post-9/11 GI Bill The federal government supports the readjustment of veterans through continued education and training, principally through programs authorized under Title 38 and Title 10 of the U.S. Code. The programs, known as GI Bills, offer educational assistance through monetary payments to veterans and servicemembers, and their family members. The active GI Bills are the Post-9/11 GI Bill, Montgomery GI Bill-Active Duty (MGIB-AD), the Survivors and Dependents Educational Assistance Program (DEA), the Montgomery GI Bill-Selected Reserve (MGIB-SR), the Reserve Educational Assistance Program (REAP), and the Post-Vietnam Era Veterans Educational Congressional Research Service 2

7 Assistance Program (VEAP). 3 In FY2014, about $12 billion in GI Bill benefits were paid on behalf of approximately 1 million individuals. 4 The Post-9/11 GI Bill (Title 38 U.S.C., Chapter 33) is intended to support qualifying individuals who served on active duty in the uniformed services on or after September 10, 2001, in their readjustment to civilian life, and to support retention in the uniformed services. 5 Qualifying individuals may receive educational assistance payments while enrolled in approved programs of education or training. Approved programs include, but are not limited to, secondary school, noncollege degree programs (NCD), postsecondary degree programs, vocational flight training, correspondence programs, apprenticeship or on-the-job training, and licensure, certification, and academic tests. 6 The programs may be outside the United States. Dependents of qualifying individuals who are pursuing an approved program of education may also be eligible for Post-9/11 GI Bill benefits. Dependents may receive a transfer of entitlement (ToE) from a qualifying individual or may receive entitlement (Marine Gunnery Sergeant John David Fry Scholarship Program, Fry Scholarship) as a result of a qualifying individual s death in the line of duty while on active duty on or after September 11, Program benefit levels were originally designed to reward individuals for their service during a time of arduous conflict by covering the full cost of public undergraduate education for in-state students. 7 Eligible individuals may receive one or more of the following payments: tuition and fees, Yellow Ribbon GI Education Enhancement Program Payments (YR payments), 8 housing allowance, books and supplies stipend, tutorial assistance, licensing and certification test fees, national test fees, relocation and travel assistance, supplemental assistance, and Tuition Assistance Top Up payments. Statutory provisions establish maximum amounts for most of the payments. Individuals may receive less than the maximum for a variety of reasons, including, but not limited to, the eligible individual s type of enrollment or pursuit, rate of enrollment or pursuit, active duty status, and aggregate length of qualifying active duty service. Eligible individuals are entitled to 36 months (or the part-time equivalent) of Post-9/11 GI Bill benefits, which must be used within a period specified in statute. Entitlement is charged one day for one day of full-time pursuit, a proportional percentage of a day for less-than-full-time pursuit, or one day depending on the amount of the payment. The period during which entitlement may be used depends on the qualifying individual s length of service, and either the qualifying individual s date of discharge or release from active duty or the child s age or receipt of a high school diploma or the equivalent. 9 3 For more information on the GI Bills, see CRS Report R42785, GI Bills Enacted Prior to 2008 and Related Veterans Educational Assistance Programs: A Primer, by (name redacted). 4 FY2016 President s budget request. 5 The uniformed services include the Army, Navy, Marine Corps, Air Force, and Coast Guard, including the reserve components, and commissioned officers of the Public Health Service (PHS) and the National Oceanic Atmospheric Association (NOAA). 6 These requirements and process for approving programs of education are outside the scope of this report. 7 P.L In cases in which tuition and fees charged by an institution of higher learning (IHL) are not fully covered by the tuition and fees payment benefits, the IHL may voluntarily enter into a Yellow Ribbon Program agreement with the VA to match an equal percentage of some portion of the remaining tuition and fees. 9 Statutory provisions provide some exceptions to these periods of benefit availability. Congressional Research Service 3

8 Individuals apply to the VA for benefits, and it certifies their eligibility. Once an individual s educational institution or training establishment certifies enrollment or pursuit of an approved program of education, the VA pays benefits to the individual and institution, as appropriate. Over three-quarters of a million individuals received over $10 billion in Post-9/11 GI Bill benefits in FY In academic year , there were, on average, 73 Post-9/11 GI Bill participants at each educational institution that had at least one. Approximately 14% of institutions with a Post-9/11 GI Bill participant enrolled only one recipient, and approximately 16% enrolled 100 or more recipients. 11 Educational institutions and training establishments receive a reporting fee of $12 per GI Bill and Vocational Rehabilitation and Employment program (VR&E) participant and $15 per GI Bill and VR&E participant that receives an advanced payment. 12 The fee may be used to support the costs of certification or programs for veterans. The VA paid over $10 million in reporting fees in FY2013, in addition to participant benefits. Federal Pell Grant Program The federal government supports access to postsecondary education, primarily through programs authorized by the Higher Education Act (HEA). Title IV of the HEA authorizes a broad array of federal student aid programs that assist students and their families with paying for or financing the costs of obtaining a postsecondary education. The programs include Pell Grants, Stafford Loans, Federal Supplemental Educational Opportunity Grants (FSEOG), the Teacher Education Assistance for College and Higher Education (TEACH) Grant program, Federal Perkins Loans, and Federal Work-Study programs. 13 In FY2014, nearly $134 billion in HEA Title IV aid was made available to almost 13 million students. 14 The Federal Pell Grant program, the single largest source of federal grant aid supporting postsecondary students, is intended to increase access to postsecondary education for financially needy individuals. Eligible individuals may receive a grant of money while enrolled in eligible programs at an eligible institution of higher education (IHE; see Appendix A for a description of an IHE). The benefits were originally designed to help qualified high school graduates with exceptional financial need take advantage of the benefits of higher education. 15 Pell Grants are intended to be the foundation for all federal student aid. 10 FY2015 President s budget request. 11 CRS analysis of data from the U.S. Department of Veterans Affairs, Congressional Liaison, ed to CRS on February 25, VR&E is an entitlement program that provides job training and related services to veterans with service-connected disabilities. For more information, see CRS Report RL34627, Veterans Benefits: The Vocational Rehabilitation and Employment Program, by (name redacted). 13 For more information on Stafford Loans, see CRS Report R40122, Federal Student Loans Made Under the Federal Family Education Loan Program and the William D. Ford Federal Direct Loan Program: Terms and Conditions for Borrowers, by (name redacted). For more information on Federal Supplemental Educational Opportunity Grants (FSEOG), Federal Perkins Loans, and Federal Work-Study programs, see CRS Report RL31618, Campus-Based Student Financial Aid Programs Under the Higher Education Act, by (name redacted) and (name redacted). 14 U.S. Department of Education, Office of Federal Student Aid, Federal Student Aid Annual Report FY2014, November 14, P.L Congressional Research Service 4

9 To be eligible for a Pell Grant in award year , students must meet several criteria: completion of secondary school or an equivalent, 17 citizenship or eligible noncitizen status, 18 Selective Service registration, 19 and pursuit of an eligible program at an eligible institution. Several situations related to a drug conviction, other Title IV aid (e.g., defaulting on student loans), and institutionalization may disqualify otherwise eligible individuals from receiving a Pell Grant. 20 Pell Grant funds are available to students enrolled for the purpose of earning a certificate or degree in an eligible program at a domestic, Title IV-participating IHE. 21 Given statutory and regulatory criteria, 22 eligible programs may be undergraduate courses of study; post-baccalaureate K-12 teacher certification or licensure programs if enrolled at least half-time; one year of noncredit or reduced-credit remedial coursework; 23 correspondence programs; 24 flight school programs; English as a second language (ESL) courses; cooperative education programs; and for students with an intellectual disability, as defined in the HEA, a comprehensive transition and postsecondary program for students with intellectual disabilities. 16 The Pell Grant award year begins the first day of July in a given year and ends the last day of June the following year. 17 Students who first enroll on or after July 1, 2012, must have a high school diploma, the recognized equivalent, or have completed homeschooling at the secondary level. Students who enrolled prior to July 1, 2012, and do not have a high school diploma or recognized equivalent, must either (1) demonstrate an ability to benefit from postsecondary education by passing an examination approved by ED to be eligible for federal student aid, or (2) successfully complete six credits or 225 clock hours of college work applicable to a certificate or degree offered by a postsecondary institution. 18 Students must generally be U.S. citizens, U.S. nationals, U.S. permanent residents, eligible noncitizens, or citizens of the Freely Associated States. 19 Non-exempt males between 18 and 25 years of age must have registered with the Selective Service System (SSS). 20 Conviction for possession or sale of drugs while receiving federal student aid may disqualify students. A federal or state judge may deny persons convicted of drug trafficking or possession from receiving student aid. The student can regain eligibility by waiting out the ineligibility period, completing a rehabilitation program, having the conviction removed, or passing two unannounced drug tests. Students are ineligible if they have failed to resolve a default on a Title IV student loan, have inadvertently exceeded annual or aggregate Title IV loan limits, have failed to repay or make arrangements to repay an overpayment on Title IV aid, have failed to repay Title IV funds obtained fraudulently, or are subject to a judgment lien for a debt owed to the United States. Students who are incarcerated in a federal or state penal institution are ineligible for Pell Grants. Students who are subject to an involuntary civil commitment following incarceration for a sexual offense (as determined under the Federal Bureau of Investigation s (FBI's) Uniform Crime Reporting (UCR) Program) are ineligible. A default on a Title IV student loan may be resolved through repayment in full; six consecutive, full, voluntary, and on-time payments under an approved repayment arrangement; or loan rehabilitation through nine consecutive, full, voluntary, and on-time payments within 10 consecutive months under an approved repayment arrangement. In addition, individuals who have earned a bachelor s degree, more advanced degree, or the equivalent are ineligible for Pell Grants. 21 For more information on eligible IHEs, see CRS Report R43159, Institutional Eligibility for Participation in Title IV Student Financial Aid Programs, by (name redacted). 22 The requirements and process for determining eligible programs are outside the scope of this report. 23 A remedial course is a course of study designed to increase the ability of a student to pursue a course of study leading to a certificate or degree. A remedial course is not preparatory coursework, which prepares a student for a given program. 24 Correspondence or home study courses provide instructional materials and exams to students who do not physically attend classes at the school and who are studying independently. Exams are returned to the school for grading. If the course uses video cassettes or discs and the school provides the same instruction to students who physically attend classes, the course is not considered correspondence. Congressional Research Service 5

10 Cumulative lifetime eligibility for Pell Grant aid is limited to six awards or 12 full-time semesters (or the equivalent) for all recipients. During each award year, eligible individuals may receive up to a maximum amount ($5,730 in award year ) determined by statutory provisions. The amount may be reduced depending on the financial need of the student and his/her family, the student s educational expenses, and the student s enrollment status. Individuals apply for a Pell Grant by filling out the Free Application for Federal Student Aid (FAFSA 25 ). ED information technology systems process the FAFSA to determine the individual s basic eligibility and expected family contribution (EFC). The financial aid administrator at an IHE calculates the Pell Grant amount and awards it to the student s school account. The program is estimated to have provided over $35.7 billion to approximately 9.7 million undergraduate students in FY2011. In award year , approximately 41% of all undergraduates in Title IV-participating IHEs were estimated to have received Pell Grants. Of those IHEs with Pell Grant recipients, there were, on average, over 1,000 Pell Grant recipients at each one. Approximately 15% of IHEs with Pell Grant recipients had fewer than The Pell Grant program pays participating institutions an administrative cost allowance of $5 per enrolled recipient. This allowance is expected to offset some of the administrative costs of the Pell Grant program and other smaller Title IV aid programs. Key Differences There are several differences in the administration of the Post-9/11 GI Bill and Pell Grant programs. Table 2 provides a succinct overview of some key differences. A full explanation of each is available in the appropriate section following the table. Some of the administrative differences may be a consequence of the relatively younger age of the Post-9/11 GI Bill; what may arguably be termed greater benefit complexity for the Post-9/11 GI Bill; and the complexity of DOD records. Because the Post-9/11 GI Bill was enacted in 2009 and the Pell Grant program was enacted in 1973, ED, IHEs, and Congress have had more time and resources to develop a suite of fully automated and integrated information systems, which administer Pell Grants in concert with the other HEA Title IV aid programs, and to improve process and system efficiency through administrative, regulatory, and legislative enhancements. 27 And although the VA has administered several GI Bill programs since 1944, the Post-9/11 GI Bill benefit architecture was not compatible with the legacy GI Bill information systems. Pell Grants are a single payment type intended to cover educational costs; while the most common Post-9/11 GI Bill benefit includes four different payments (tuition and fees, YR, housing, and books) intended to cover different educational costs and thus requiring differing award rules. Besides the most common Post-9/11 GI Bill payments, there are additional payment types covering less 25 FAFSA is a registered trademark of Federal Student Aid, U.S. Department of Education. 26 CRS analysis of data from the U.S. Department of Education, Integrated Postsecondary Education Data System (IPEDS). 27 The Higher Education Amendments of 1998 (1998 Amendments; P.L ) required the Department of Education to develop a plan for a modernized system for the delivery of HEA Title IV aid programs, including an open, common, and integrated delivery and information system. Congressional Research Service 6

11 commonly utilized educational costs that require different information for certification and payment. Differences in the level of automation are crucial to processing speed and accuracy. Finally while ED checks several Pell Grant eligibility criteria through automated database matching programs with other federal agencies, VA has been unable to fully automate the calculation of qualifying active duty service. 28 As a consequence, initial FAFSA processing is automated, but initial processing of applications for veterans education benefits is primarily manual. It may be of note that despite initial FAFSA automation, at least one data element on the application of almost half of all eligible applicants is verified manually by an FAA to ensure system integrity. 29 Both programs allow individuals to apply online. The Post-9/11 GI Bill application requires most applicants to choose the most advantageous GI Bill. The Pell Grant application requires more information, including personal financial information, that confuses some applicants. A veteran may apply for and receive a certificate of eligibility for Post-9/11 GI Bill benefits at any time within their entitlement period even if he or she does not plan to use the benefits in the immediate future. A Pell Grant application is only processed for eligibility during college admissions or while attending college. The initial benefit application is processed to determine eligibility. With respect to the Post-9/11 GI Bill, the VA cross references DOD data and several legacy systems and issues a certificate of eligibility (COE) to the individual within approximately 20 days. 30 The COE summarizes the individual s qualifying service and resulting benefit level (40%-100%), remaining entitlement, and delimiting date (the last date of eligibility for education benefits). With respect to Pell Grants, ED s Central Processing System (CPS) 31 automatically verifies basic eligibility for HEA Title IV aid, not necessarily the Pell Grant program in particular, by matching data from several federal agency databases. Within 3-5 days, CPS provides the applicant with a student aid report (SAR) that summarizes the application data and data match results, indicates the applicant s expected family contribution (EFC) and resulting potential Pell Grant amount, and provides additional HEA Title IV aid information for the application academic year. After the initial application process, the VA and educational institutions share processing responsibility for Post-9/11 GI Bill benefits, whereas the remaining Pell Grant processes are primarily the responsibility of the IHEs. This difference may contribute to the differences in the time required to pay benefits and concerns regarding who is responsible for Post-9/11 GI Bill overpayments the participant or educational institution. An overpayment occurs when a benefit amount is paid on behalf of a Post-9/11 GI Bill participant to the participant or to the educational institution, and then it is subsequently determined that the individual is eligible for a smaller amount. 28 U.S. Government Accountability Office, Veterans Disability Benefits: Challenges to Timely Processing Persist, GAO T, March 13, U.S. Department of Education, Federal Pell Grant Program End-of-Year Report, Table As of January 2014, the VA was processing original claims in an average of less than 20 days according to the Department of Veterans Affairs, Automation Speeds Benefits Processing for Post-9/11 GI Bill Students, press release, January 29, CPS is operated, maintained, and managed by an ED contractor. Congressional Research Service 7

12 Secondary claim/application processing determines benefit payment amounts based on actual or planned enrollment. An IHE may complete secondary processing in order to inform prospective students of their HEA Title IV aid package and encourage enrollment. The VA completes secondary processing only to award payments. For registered or enrolled students, the educational institution reports enrollment to the VA in order for the VA to calculate and make Post-9/11 GI Bill payments accordingly. The federal government encourages educational institutions to counsel GI Bill participants on the complexities of higher education and financial aid. For registered or enrolled students, the IHE may in special circumstances adjust some data elements used in calculating the HEA Title IV aid package, including Pell Grant payments, and make payments accordingly. The IHE reports Pell Grant payments to ED for payment. The key differences between the handling of overpayments from the Post-9/11 GI Bill and Pell Grant programs have to do with the total amount of the overpayment and the related programs. A Pell Grant overpayment occurs when a student receives more aid than that which he or she is eligible. A single Post-9/11 GI Bill payment may exceed $20,000. A single Pell Grant disbursement in FY2014 was no more than $2,865. For purposes of Post-9/11 GI Bill payments, VA first sends debt notification letters to the participant explaining how the participant may choose to resolve the debt, before VA notifies credit reporting agencies and refers the debt to the Department of the Treasury. For purposes of Pell Grants, the FAA will first adjust a student s Title IV aid package during the current award year to eliminate an overpayment and then attempt to recoup the funds from the student before referring the debt to ED s Debt Resolution Services. The onus is primarily on the participant for Post-9/11 GI Bill purposes and on the IHE for Pell Grant purposes. One difference key to every process step is the greater transparency in the Post-9/11 GI Bill program from the perspective of the participant. Many veterans may with little assistance correctly assess their Post-9/11 GI Bill eligibility and the payment amounts that they may receive. The eligibility criteria and calculations for Pell Grants would be difficult for students to duplicate accurately. For example, the key criterion for Post-9/11 GI Bill eligibility is the individual s service record, which may be obtained from their service unit if the exact dates are not remembered. A key criterion for Pell Grant eligibility is EFC, which is based on calculations using financial information, benefit receipt, and statutory provisions. Congressional Research Service 8

13 Table 1. Key Program and Administrative Differences: Post-9/11 GI Bill (Ch. 33) and Pell Grant Program (Additional criteria and qualifications may apply) Area Post-9/11 GI Bill (Ch. 33) Pell Grant Program (Pell) Key Differences Purpose Policy Objectives Reward military service, support readjustment to civilian life, ensure comprehensive educational benefits, and improve Armed Forces recruitment and retention. Increase access to postsecondary education for individuals from lowincome families, and serve as the foundational aid for needy undergraduates. Ch. 33 serves uniformed servicemembers and their families; Pell serves individuals from low-income families. Ch. 33 rewards and promotes service in the uniformed services; Pell attempts to partially redress economic circumstance. Program Characteristics/Components Eligible Individuals Eligible servicemembers and veterans, and their eligible dependents. Eligible undergraduates demonstrating financial need. Ch. 33 eligibility primarily contingent on service in the uniformed services; Pell eligibility primarily contingent on financial need. Dependents of a qualifying individual may be eligible for Ch. 33. Pell eligibility cannot be transferred. Benefit Availability Up to 36 months of full-time attendance/pursuit within 15 years of discharge (or within specified age range for dependent children). Six full-time awards or 12 full-time semesters after high school completion or equivalent. Ch. 33 provides the equivalent of four years of traditional college; Pell provides the equivalent of six years of traditional undergraduate education. a Ch. 33 entitlement expires over time; Pell eligibility does not. Programs of Education High school, vocational training, undergraduate and graduate postsecondary programs, flight training, apprenticeship, on-the-job training, licensure and certification, national tests. Undergraduate programs and postbaccalaureate K-12 teacher certification programs that do not lead to graduate degrees and that are offered by institutions that do not offer a baccalaureate degree in education. Ch. 33 benefits may be used for many programs of education and training; Pell is limited to traditional undergraduate education. a Ch. 33 benefits may be received for enrollment in foreign educational institutions; Pell may not. Estimated FY2015 Participation and Cost b 0.9 million individuals $12.4 billion 8.9 million individuals $33.9 billion Pell pays benefits to about 10 times as many individuals as Ch. 33, but the average estimated FY2015 individual benefit amount for Pell ($3,826) is one-quarter that of Ch. 33 ($14,570). CRS-9

14 Area Post-9/11 GI Bill (Ch. 33) Pell Grant Program (Pell) Key Differences Maximum Individual Benefit Level per Participant/Student Administration Tuition and fees charged, subject to caps; local housing costs; c $1,000 annual books and supplies stipend; $1,200 tutorial assistance; and $500 relocation and travel assistance. Specified in statutory provisions (estimated $5,830 in award year ), but not more than cost of attendance. d Administrator The VA is primary administrator. ED primarily pays contractors and schools to administer program. Application Veterans Online Application (VONAPP) or paper VA Forms , e, or Free Application for Federal Student Aid (FAFSA) completed online, on paper, through a toll-free number, or by financial aid administrator (FAA). Ch. 33 covers education-related costs up to statutory limits; Pell covers education-related costs adjusted for the student s and family s assessed ability to pay, and up to the statutory limit. The VA is the primary Ch. 33 administrator; contractors and schools are the primary Pell administrators. The estimated time required to complete each application is 15 minutes for VA Form and three hours for the FAFSA. The GI Bill benefit application must be completed by the applicant; the FAFSA may be completed by the applicant or by the FAA. The GI Bill benefit application may be submitted within one year of enrollment; the FAFSA must be submitted by the end of the award year. Both applications are generally submitted prior to enrollment. GI Bill applicant must choose a GI Bill; FAFSA is a general application for HEA Title IV aid. CRS-10

15 Area Post-9/11 GI Bill (Ch. 33) Pell Grant Program (Pell) Key Differences Initial Claim/Application Processing The VA verifies DOD records, reviews prior GI Bill usage, determines eligibility, and issues Certificate of Eligibility (COE). ED system checks against several federal databases, checks HEA Title IV aid history, determines basic eligibility, calculates expected family contribution (EFC), and produces student aid report (SAR) and institutional student information record (ISIR). An original GI Bill claim is processed within 20 days, on average; FAFSA online is processed within 3-5 days. The VA primarily verifies DOD records manually; ED systems automatically verify records against the databases of several federal agencies, and then FAAs manually verify some data to improve system integrity. An original GI Bill claim is processed in multiple systems with multiple redundant data entry points; FAFSA is processed by a central processor in Iowa. Ch. 33 eligibility is determined by the VA; Pell Grant eligibility is determined by ED and FAAs. Veteran application processing at regional processing offices (RPOs) is subject to local conditions (e.g., weather); FAFSA processing is more independent of local conditions because it is automated. The COE is mailed; the SAR is available online for individuals who applied electronically. The VA develops and implements the IT systems used to administer; ED and various third parties develop and implement IT systems. CRS-11

16 Area Post-9/11 GI Bill (Ch. 33) Pell Grant Program (Pell) Key Differences Secondary Claim/Application Processing The VA completes secondary processing based on certifications of enrollment or pursuit submitted by either the institution or individual. The FAA packages aid and provides award letter to student. Educational institution or training establishment certifies enrollment or pursuit before the VA makes Ch. 33 payments; IHE verifies enrollment to process or disburse Pell award. Ch. 33 benefits are only calculated for participants pursuing a program of education; a Pell Grant and Title IV aid package may be estimated for prospective students. Ch. 33 supports education and training with multiple types of payments; Pell supports traditional undergraduate education with one type of payment. a The VA maintains the list of approved programs of education for Ch. 33; for Pell, ED maintains the list of Title IV-eligible institutions, and the institutions maintain the list of eligible programs. The veterans claim examiner (VCE) may not take into consideration special circumstances of individuals for Ch. 33; the FAA may use professional judgment to adjust for special circumstances of individuals affecting the Pell award. The VA makes educational and vocational counseling available to Ch. 33 participants. Educational institutions are encouraged to provide academic and financial advice to Ch. 33 participants; the VA and ED make college planning and financial aid information available. Ch. 33 payment amount calculations are explained to students; Pell amount calculations are less transparent. CRS-12

17 Area Post-9/11 GI Bill (Ch. 33) Pell Grant Program (Pell) Key Differences Initial Payment Processing The VA initiates payments to individuals and institutions, as applicable, and issues award letters. Individual accepts aid package. The FAA disburses payments per schedule. Ch. 33 tuition and fees payments for participants enrollment at private educational institutions may vary significantly between academic terms because maximum amounts are paid until the annual maximum is met; Pell payments are generally the same for the fall and spring of a standard academic trimester academic year. The Ch. 33 housing allowance is available for every day eligible individuals are enrolled; a Pell award is not available for the final term of a standard term academic year (e.g., summer semester) for full-time students. With the exception of tuition and fees, Ch. 33 benefits (e.g., housing allowance) are paid for training and education completed; Pell awards are for education while it is being pursued. VA makes Ch. 33 payments to participants and schools; IHEs disburse Pell payments to students school accounts, IHE funds are reimbursed by ED. Some Ch. 33 payments are executed through a manual, paper process; Pell payments are primarily automated. Subsequent/Ongoing Payments School certifying officials (SCOs) correct or revise a previous certificate of enrollment if the participant s rate of pursuit changes or other factors change. SCOs and individuals must certify enrollment every academic term, month, year, or program, depending on the type of education and training, and completion of pursuit. For subsequent payments in the same award year, the student exhibits satisfactory academic progress, and the FAA disburses payments per schedule. For subsequent award years, the student resubmits FAFSA, and ED and the FAA reinitiate the processes starting with eligibility. Ch. 33 participants do not reapply for subsequent benefits; Pell recipients must reapply annually. A change in enrollment mid-term may result in an overpayment due from the Ch. 33 participant to the VA or an adjustment of Pell funds in the subsequent term by the FAA. For the GI Bills, educational institutions define satisfactory academic progress; for HEA Title IV aid, IHEs define satisfactory academic progress according to minimum federal standards. CRS-13

18 Payment Adjustments Overpayments Area Post-9/11 GI Bill (Ch. 33) Pell Grant Program (Pell) Key Differences SCO must report changes in VA- ONCE or submit VA Forms to VA. Amount is calculated by the VA based on VA-ONCE. The VA issues debt letter to institution or individual. Institution or individual must repay debt, enter into payment plan, or appeal debt with VA Debt Management Center (DMC). Treasury Offset Program resolves long outstanding debts. FAA repackages HEA Title IV aid and may reduce subsequent Pell Grant award to ensure overpayments are eliminated. The IHE repays its overpayments to ED. The individual repays overpayments to the IHE. Unresolved individual debts are escalated by the IHE to ED s Debt Resolution Services, and while unresolved the individual loses HEA Title IV aid eligibility. VA assigns responsibility for resolving GI Bill issues either to participants or educational institutions; The FAAs are responsible for resolving issues with ED unless the student has an issue with the FAA. Ch. 33 overpayments must be resolved by the participant or school; most Pell Grant overpayments are resolved by the FAA adjusting other aid in the aid package in the same or subsequent payment period. Source: Compiled by CRS based on a review of U.S. Code; Department of Veterans Affairs, School Certifying Official Handbook; Department of Veterans Affairs, VA- ONCE Guide; Department of Education, Student Aid Handbook; and other agency publications and documents. a. Traditional undergraduate education means undergraduate programs and institutions that are eligible for Title IV aid, as authorized by the Higher Education Act. b. FY2015 President s Budget Request. c. Local housing costs are determined by the Department of Defense for a member of the Armed Forces with dependents in pay grade E-5, and based on a survey of civilian housing costs for particular geographic locations. d. Cost of attendance is determined by the IHE based on an estimate of the full-time, full-year costs for a student, and generally including (depending on the circumstances) tuition and fees, books, supplies, transportation, miscellaneous personal expenses, room and board, dependent care, a first professional license or certificate, study-abroad, employment costs, and other costs defined in statutory provisions. e. Standard terms are semesters, trimesters, or quarters, as these words are traditionally used. In traditional usage, an individual semester or trimester provides about 14 to 17 weeks of instructional time and full-time is defined as at least 12 semester or trimester hours. The program s academic calendar generally consists of three terms, one each in fall, spring, and summer. In traditional usage of the term quarter, an individual quarter provides about 10 to 12 weeks of instructional time, and full-time is defined as at least 12 quarter hours. The program s academic calendar generally includes three quarters in the fall, winter, and spring and often a summer quarter as well. CRS-14

19 Benefit Application and Submission The first step in benefit administration is notification from the individual of a desire to take advantage of a benefit. Individuals must apply for the Post-9/11 GI Bill and Pell Grant programs. Application for Veterans Education Benefits Eligible individuals apply for most GI Bill benefits, including Post-9/11 GI Bill benefits, by mail or by completing the Veteran s Online Application (VONAPP). There are separate paper forms for qualifying individuals, Fry scholarship beneficiaries, and transferees. 32 VONAPP allows servicemembers and veterans, and their families, to apply for various VA benefits, including, but not limited to, education, burial, or pension benefits. The application may be submitted as soon as the individual becomes eligible for the Post-9/11 GI Bill and must be submitted within one year of enrollment or the pursuit for which the individual would like payment. 33 The VA provides multiple modes of assistance to individuals completing the application and guarantees that it will respond to ed questions within five to seven working days. The application form requests the applicant s identifying information (e.g., Social Security number) and other information that assures the VA can contact the individual, make payments to the individual, and determine eligibility (e.g., service record). For dependents, the application also requires identifying information for the qualifying individual; and for Fry scholarship applicants, it requires a record of other VA benefits that the applicant has applied for or received. 34 In addition, individuals must choose the education benefit program from which they would like to receive benefits. Qualifying individuals who are applying for Post-9/11 GI Bill benefits and who are eligible for at least one of the MGIB-AD, MGIB-SR, or REAP programs must make and date an irrevocable election to receive Post-9/11 GI Bill benefits in lieu of one of the aforementioned programs. 35 The application notifies individuals that application processing may be expedited by sending proof of their service record and evidence of eligibility for supplemental benefits. Once the application has been submitted, applicants may follow their application and benefit information through ebenefits. ebenefits is a portal for veterans, servicemembers, and their families to research, find, access, and eventually manage their benefits, as well as manage their personal information. 32 The forms are available on the VA s website or in a VA office U.S.C and The DOD transfer process is outside the scope of this report. 35 Despite the irrevocable election, individuals may choose to receive payments as if under the relinquished program. Congressional Research Service 15